Sodas continue to face an uphill battle in the U.S. against growing health concerns among consumers regarding large amounts of sugar and calories in such drinks. Diet carbonated soft drinks, which offer a low/no calorie alternative, have fared even worse in the last couple of years in the domestic market, as consumers question the safety of artificial sweeteners. Soda sales fell by 3.2% year over year to less than 13 billion gallons last year, capping-off the ninth consecutive year of decline in sales. Dollar sales of CSDs further fell by almost 3% in the twelve weeks ended April 12 in measured channels. Downward pressure on CSDs worsened in the four week period ended April 12 as volumes fell by 5.7%. But the steepest decline was recorded in diets, with retail sales contracting 9.5% year over year. Beverage companies such as The Coca-Cola Company, PepsiCo, and Dr Pepper Snapple have looked to stop this continual drop in CSD demand by introducing low calorie sugar alternatives, and testing different combinations. As soft drinks still remain the largest segment of the U.S. liquid refreshment beverage market, constituting 43% of the net volumes by our estimates, which company could crack the right sugar formula remains to be seen.

The US Food and Drug Administration has approved a sixth artificial sweetener and flavor modifier called advantame, for use in non-alcoholic beverages (including CSDs), apart from other foods. Safety concerns regarding the artificial sweetener aspartame used in many low/no calorie drinks have slowed sales for diets. Reports suggest that aspartame can cause serious health problems along with sugar cravings, dehydration and even weight gain. The natural sweetener stevia, considered a solution to the high-calorie problem, is also known to leave bitter aftertastes. Advantame is a water soluble, white crystalline powder that has a clean sugar-like taste with no bitter aftertastes, and is soluble with both natural sugars and other low/no calorie sweeteners, according to Ajinomoto, manufacturer of advantame. The last artificial sweetener approved by the FDA was Neotame in 2002, which however failed to become a main-stay in beverages. The main advantages of advantame are that it is around 20,000 times sweeter than sugar, and is cost-effective in use. This means that the flavor modifier could be used to partially replace sweeteners in soft drinks, providing low calorie solutions for consumers, as well as higher profitability for the beverage makers. Now that advantame has been approved by the FDA, soft drink companies could look to test this substitute in their offerings, in a bid to regain lost soda customers.

Beverage Makers Revert To Natural Sugars

Amid safety concerns regarding artificial ingredients, companies such as PepsiCo and Dr. Pepper have looked to return to the traditional use of sucrose. PepsiCo announced the launch of “Pepsi made with real sugar” in the U.S. in June this year. This comes as high-fructose corn syrup has suffered negative consumer perception. Although studies suggest no considerable difference between the impact of sugar and corn syrup, the latter was a top food safety concern for nearly 60% Americans, according to a NPD Food Safety Monitor survey in 2008. Using real sugar might be able to bring back some customers to the ailing CSD category due to its positive perception.

On the other hand, as Dr. Pepper’s low calorie TEN lineup continues to record tepid sales, the company will now launch naturally sweetened 60-calorie versions of some of its CSDs. In fact, Dr. Pepper started testing low calorie versions of its flagship brands Dr. Pepper, 7Up and Canada Dry is some select markets in April. While a 12 ounce bottle of regular Dr. Pepper carries 150 calories, the Dr. Pepper TEN version provides only 10 calories, but uses the artificial sweetener aspartame. Although having six times as many calories as the TEN lineup, Dr. Pepper hopes that consumers might prefer naturally-sweetened sugary drinks, which still have less than half the calorie count of regular CSDs. With consumers hinting at preference to natural sucrose, and the simultaneous launch of another artificial sugar substitute advantame, beverage companies will look for the right combination to encourage soft drink consumption.

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